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GM CEO says only learned of defective cars in late January

By Ben Klayman

DETROIT (Reuters) - General Motors Co Chief Executive Mary Barra said on Tuesday that she did not learn details about defective GM cars linked to 12 deaths until January 31, just two weeks after she took over as CEO and nearly 13 years after GM engineers first documented problems.

The automaker last month recalled more than 1.6 million cars from 2003 to 2007 to replace faulty ignition switches that could cause the engine to shut down and turn off the airbags. The first death linked to the defect occurred in Maryland in July 2005.

"I am very sorry for the loss of life that has occurred," Barra said at a roundtable meeting with reporters on Tuesday.

Also on Tuesday, GM named a 40-year company veteran to the new position of vehicle safety chief, responsible for product safety issues including recalls. Jeff Boyer, 58, ranks three rungs below Barra but will brief the GM CEO on the company's push to improve its recall process.

Barra said she learned in late December, when she was still head of GM's global product development organization, that there was a review of the Chevrolet Cobalt, one of the cars subsequently involved in the recall. She added she was not told the details of the review at that time.

"Clearly, this took too long," she said of the lengthy internal engineering probe of the defective switches, which GM first learned about in 2001 and initially addressed in dealer service bulletins in 2005.

The first replacement switches will be available for customers on April 7, and GM plans to have enough parts for every recalled car by "the October time frame," Barra said.

Another GM executive, Mark Reuss, said at the same roundtable meeting on Tuesday that he called Barra on January 31 after GM executives decided to recall the Cobalt and other models with the defective switches. Reuss, who was president of GM North America, succeeded Barra in mid-January as global product development chief.

Barra said after she learned of the problem, GM's board was immediately informed.

Both Barra and Reuss said they had never heard of the issue during their earlier jobs with GM before it came up in January.

READY TO TESTIFY

Barra said she is prepared to testify about the recall at U.S. congressional hearings in Washington. She also emphasized that there are "no sacred cows" in the company's internal investigation.

She declined to address directly questions about whether GM plans to set up a trust fund for crash victims. Some safety advocates have urged the company to establish a $1 billion trust fund to take care of those affected.

Barra also said GM has not contacted families of the 12 victims, preferring to wait until the company's internal probe is completed in "probably a few months." But she promised the company would take action once details of probe emerged.

"Until the investigation is done, I won't know who knew what when," Barra said, adding that no executive had been disciplined or fired related to the defective ignition switches.

Barra said she was not aware if GM had forwarded any information to the U.S. Department of Justice, which has opened a criminal probe of the automaker. She added that senior executives meet daily or talk by telephone about the recall.

Barra said her goals are twofold: "To repair every single one of these vehicles," and "to make sure this problem never happens again." She said GM intends to fix every car, even those resold several times.

Reuss said GM feels it has covered all of the vehicles affected by the faulty switch, and Barra later added that the affected cars were safe to drive if owners used a key ring with only the key on it.

Barra added that GM may use its OnStar in-vehicle communication system to contact customers about recalls going forward.

She also said that the new safety chief, Boyer, had "complete authority" to make changes in the safety and recall process. GM wants Boyer to improve its recall process, helping it identify defects sooner and repair cars faster, but the core process involving a team of engineers and other experts recommending a safety campaign will not change, a spokesman said.

Boyer was not a chief engineer on any of the recalled cars, but worked on interiors including some in the recalled cars, the spokesman said. Boyer focused on improving interior appearance and functionality, but did not work on electrical parts or mechanical components like the ignition switch.

Asked why Boyer reports to engineering chief John Calabrese, who might be part of the company's internal probe, Barra said she had confidence in GM's vehicle engineering and product development organization. She declined to speculate on where the internal probe could lead.

On Monday, GM announced three more recalls affecting another 1.75 million newer-model vehicles for unrelated issues, saying the impact of the defective ignition switches had sped up the company's recall process.

GM shares closed 1.6 percent higher at $35.17 on the New York Stock Exchange on Tuesday. Last week, the shares fell about 10 percent.

(Additional reporting by Bernie Woodall in Detroit; editing by Matthew Lewis)

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